On March 6, Seoul announced a new plan for resolving the lingering dispute with Japan over compensation for South Koreans forced to labor for Japanese companies during the 1910-45 occupation. If successful, it would facilitate bilateral reconciliation and remove a major impediment to U.S. efforts to enhance trilateral security cooperation against common North Korean and Chinese security threats.  

The plan drops Seoul’s previous demands for direct payments from Japanese companies or the government. Instead, Foreign Minister Pak Jin announced that payments to the victims would come from South Korean corporate contributions to a government foundation. The proposal triggered harsh rebukes from the victims and the opposition party, which had demanded direct Japanese recompense and apology.

By itself, Seoul’s one-sided action seems an unsatisfactory resolution to a 2018 South Korean court ruling requiring two Japanese companies to provide compensation. However, the announcement is likely the first step of a comprehensive plan choreographed with Japan that will gradually become public. Japanese firms may decide to voluntarily contribute to the fund and Tokyo may remove economic trade restrictions it imposed on South Korea in retaliation for the court ruling.

Historic issues impede security cooperation

Japanese–South Korean relations suffer from centuries of built-up animosity arising from sensitive historical issues and sovereignty disputes. Cyclical spikes in tensions are triggered by incidents that unleash nationalist furor in both countries.

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In 2018, mutual trust deteriorated when President Moon Jae-in unilaterally rescinded a 2015 bilateral agreement on “comfort women” – a euphemism for South Korean women forced to serve in Japanese military brothels – that had been negotiated by the previous South Korean administration. Under that accord, Tokyo had provided an apology and agreed to pay $8 million to Korean women in return for Seoul declaring the matter “finally and irreversibly” resolved.

That same year, the South Korean Supreme Court ordered Japanese companies Nippon Steel Corporation and Mitsubishi Heavy Industries to pay 100 million Korean won ($77,000) to each of 15 South Korean plaintiffs conscripted into labor. Japanese companies resisted complying, in part due to concerns of the legal precedent for numerous additional cases. The South Korean court responded by authorizing seizure of the Japanese firms’ assets.

In 2019, Japan’s Ministry of Foreign Affairs indicated that there were at least a dozen additional pending cases that could impact more than 70 companies. South Korea estimates that about 7.8 million Koreans were forced by Japan to serve as soldiers, military officials and workers during World War II.

Tokyo declared that the court ruling violated the 1965 treaty that restored Japanese–South Korean diplomatic relations. As part of that treaty, Tokyo provided $800 million in aid and loans to resolve all outstanding issues of compensation from the Japanese occupation. In 2019, Japan retaliated to the ruling by imposing export restrictions to South Korea of chemicals critical for producing semiconductors and smartphones. Tokyo also removed South Korea from its “white list” of countries deemed not to pose a security risk and which receive preferential treatment for export-control procedures.

Waiting on reciprocal Japanese actions

In response to the Foreign Minister Park’s statement, Prime Minister Fumio Kishida affirmed that he had “inherited” and accepted apologies made by previous Japanese administrations. The most notable was the 1998 South Korean-Japanese joint declaration in which Prime Minister Keizo Obuchi acknowledged that Japan’s colonial rule of Korea had caused “tremendous damage and suffering to the people [and] expressed his deep remorse and heartfelt apology.”

Foreign Minister Yoshimasa Hayashi welcomed the new proposal from the Yoon administration “as a way to restore a healthy relationship between Japan and South Korea.” He added that Seoul’s announcement did not include any Japanese companies making voluntary contributions, but that Tokyo “does not take a particular position” on the issue, seemingly opening the way for Japanese firms to do so.

The Kishida administration appears to be preparing to remove its 2019 export restrictions on South Korea. Seoul announced it would suspend, though not yet withdraw, its complaint filed with the World Trade Organization against Japan. In turn, Japan’s Ministry of Economy, Trade and Industry announced it will initiate bilateral talks to ease its tightened export controls to South Korea. There are now indications that President Yoon may travel to Tokyo this month to meet with Kishida.

Yoon overcame Japanese wariness

Since his inauguration last year, Yoon has advocated a “forward-looking partnership” with Japan to overcome historical and sovereignty disputes and enhance regional cooperation against shared threats and challenges. Most recently, Yoon extended an olive branch during his speech commemorating the 104th anniversary of the March 1st Independence Movement. Yoon boldly described Japan as having “transformed from a militaristic aggressor of the past into a partner that shares the same universal values” as South Korea.

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In the past, South Korean presidents had often used the event to highlight the brutality of the Japanese occupation of the Korean Peninsula. Yoon paid homage to the South Korean patriots of the past but, rather than playing to nationalist themes, he commendably emphasized the necessity of working with Japan to overcome current threats.

Cautious optimism is warranted

Yoon’s attempts at reconciliation require that Japan carry through on the expected removal of export controls, as well as Japanese company contributions to the fund for victim compensation. Even if the Kishida administration does so, Yoon will still face strong domestic backlash from those arguing against reconciling with Korea’s colonial oppressor without more explicit Japanese acknowledgment of guilt.

That said, the forecast is much improved from a year ago. The change in administration in both Seoul and Tokyo resulted in leaders more aware of the necessity of cooperation to respond to a deteriorating security environment. In December, both countries issued new national security documents articulating threats to the rule of law from China and North Korea. Russia’s invasion of Ukraine underscored the potential dangers of similar Chinese action against Taiwan.

President Joe Biden hailed Seoul’s initiative as “a groundbreaking new chapter of cooperation and partnership between two of the United States’ closest allies.” Last year, South Korea, Japan, and the U.S. resumed trilateral military exercises after a five-year hiatus. The three countries engaged in anti-submarine and ballistic missile exercises and also agreed to initiate real-time exchanges of information on North Korean missile threats.

Yoon’s initiative is another positive step forward in South Korea assuming a more influential and pivotal role commensurate with its diplomatic, security, and economic strengths. The U.S. should build on the momentum by urging even greater cooperation amongst its allies, including trilateral meetings of defense and foreign ministers and coordinated contingency planning against regional threats.